The vapor industry is readying for battle. On May 5, the U.S. Food and Drug Administration (FDA) finalized its rule extending its authority to all tobacco products, including e-cigarettes, cigars, hookah tobacco and pipe tobacco. This rule helps implement the Family Smoking Prevention and Tobacco Control Act of 2009.

One of the most controversial aspects of the rule is the requirement for all manufacturers of all newly regulated products to show that the products meet the applicable public health standard set forth in the law and receive marketing authorization from the FDA, unless the product was on the market as of Feb. 15, 2007. The tobacco product review process gives the agency the ability to evaluate factors such as ingredients, product design and health risks, as well as their appeal to youth and non-users.

Jeff Stier

“While the FDA’s decision to use the Feb 2007 predicate date was not a surprise, the agency considered itself bound by that date because of the Tobacco Control Act” said Jeff Stier, senior fellow, National Center for Public Policy Research. “The publication of the rule only gives more urgency to the Cole/Bishop amendment to change the predicate date.”

The Cole/Bishop amendment to appropriations legislation wending through the U.S. House would change the predicate date so more e-cigarettes would be grandfathered into the market.

Vapor industry manufacturers are finding more than a few faults with the FDA regulations, especially the seeming lack of consideration from the industry input the regulatory agency so desperately sought.

Anthony Dillon, spokesperson for Purilum, a U.S.-based e-liquid manufacture, said that “on a quick early reading, the Administration appears to have made few if any concessions to industry or incorporated any industry comments.” Although, “the FDA is trying to reduce the barrier of the PMTA (a little) for e-product manufacturers who cannot use the SE pathway,” he said.

Christian Berkey

Dillon isn’t the only one who felt the FDA ignored industry input. Christian Berkey, founder of the first e-liquid company in the U.S., Johnson Creek Enterprises, said his company was also still reviewing the published regulations, however, “it would appear that the FDA had taken into account virtually none of the commentBerkey-courtesy-Johnson-Creary” from the vaping industry.

“That said, I expect that the Cole/Bishop amendment will pass and that the FDA’s unavailing February 2007 grandfather date will be changed to a reasonable date that allows our industry to grow and innovate,” he said.

The new legislation would prevent the FDA from requiring retroactive safety reviews of e-cigarettes that are already on the market and exempt some premium and large cigars from those same regulations. E-cigarette products introduced in the future would still undergo the safety reviews.

Cynthia Cabrera

“Our industry has a long history of supporting sensible science-based regulations, including license requirements, as well as banning sales to minors and adopting child-resistant packaging. (This) final rule pulls the rug out from the nine million smokers who have switched to vaping, putting them in jeopardy of returning back to smoking, which kills 480,000 Americans each year and costs the U.S. more than $300 billion in annual health care expenses,” said Cynthia Cabrera, president of the Smoke-Free Alternatives Trade Association, a vapor advocacy group.

“These new regulations create an enormously cost-prohibitive regulatory process for manufacturers to market their products to adult smokers and vapers. It also limits access to the 40 million adult smokers in the U.S. yet to make the switch to vaping and cripples a multi-billion dollar job-creating industry, the majority of which are made of small businesses.”

Bonnie Herzog

Wells Fargo vapor industry analyst Bonnie Herzog said that most new products will require a pre-market tobacco application (PMTA), which could take an average of 1,500 hours to complete. “Which is clearly a burden to the industry and could realistically slow down or stifle innovation,” she said “A PMTA is required if a product doesn’t meet the ‘substantial equivalence’ (SE) definition, which is narrowed to mean tobacco products must have ‘all’ of the same characteristics as the predicate tobacco product to be found substantially equivalent or the product doesn’t ‘raise different questions of public health.’”

Under staggered timelines, the FDA expects that manufacturers will continue selling their products for up to two years while they submit PMTAs and an additional year while the FDA reviews a new tobacco product application. The FDA will issue an order granting marketing authorization where appropriate; otherwise, the product will face FDA enforcement.

The FDA staggers compliance periods for different product classes based on continuum of risk. “The staggered periods depend in part on the product’s placement on the ‘continuum of risk.’ Thus, products that are believed to qualify for: (1) SE exemption will have 12-months to submit a request; (2) SE application – 18-months to submit; and (3) PMTA application – 24-months to submit. The FDA then has 12-months from each period to approve or deny the application,” said Herzog. “We are encouraged that the FDA recognizes the continuum of risk but believe these compliance periods could prove challenging for many manufacturers.”

Mitch Zeller

Mitch Zeller, director of the FDA’s Center for Tobacco Products, said the final rule is a foundational step that enables the FDA to regulate products young people were using at alarming rates—like e-cigarettes, cigars and hookah tobacco—that had gone largely unregulated, although several recent studies dispute the statement.

“The agency considered a number of factors in developing the rule and believes our approach is reasonable and balanced,” said Zeller. “Ultimately our job is to assess what’s happening at the population level before figuring out how to use all of the regulatory tools Congress gave the FDA.”

The final deeming regulations are broadly as anticipated and industry experts agree the legislation as written would be burdensome for small manufacturers to comply with while increasing the barriers to entry and entrenching large tobacco companies.

“As such, we anticipate litigation from several manufacturers, which could unfortunately prolong the uncertainty plaguing the entire industry,” said Herzog. “Our main concern is that these final deeming regs could realistically stifle innovation, which could dramatically slow industry growth by dis-incentivizing consumer conversion from combustible (cigarettes). This would ultimately have a net negative impact on public health, which is clearly in direct opposition to the FDA’s goal.”

Michael Siegel

During a press conference announcing the regulations, Zeller estimated the average cost of an application at “several hundreds of thousands of dollars.” Numerous industry experts have placed that figure at well over $1 million. The FDA has conservatively estimated the cost of a PMTA to be $330,000, according to Dr. Micheal Siegel, a professor in the Department of Community Health Sciences, Boston University School of Public Health.

“While I think this is a gross underestimate, even if we accept this as accurate, a manufacturer of 20 e-liquid flavors with three nicotine strengths each is looking at a capital cost of $19.8 million,” said Siegel. “Quite clearly, this is a cost that only a very small number of manufacturers (the tobacco companies and the very largest of the independent manufacturers) can afford. This is why the e-cigarette industry will be devastated and thousands of companies will be forced out of business.”